TaxTMI 
TaxTMI 
2020 (2) TMI 628
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....RL - a company registered under the laws of Italy. By this JVA, Respondent No.1 acquired a majority shareholding (51%) of Ravin's share capital. The material clauses of the JVA are set out hereinbelow: "8. Purpose and Objectives 8.1 Purpose of the Company and Scope of the Agreement Subsequent to Closing, the Company shall be a joint venture between Prysmian and the Existing Shareholders for the purposes of undertaking and conducting the business of the company, or for such other activities as may be determined by the Shareholders from time to time, subject to the applicable law. The business of the company shall be conducted in the best interests of the Company, and in accordance with sound professional and commercial principles." "12.6. Chairman and Managing Director 12.6.1 Mr. Karia shall be the Chairman of the Board as well as the Managing Director of the Company until: (i) Expiry of seven (7) years from the Agreement Date;or (ii) The date of which the Existing Shareholders ceaseto hold in the aggregate at least ten percent (10%) of the share capital of the Company: Whichever occurs earlier. It is hereby agreed that Mr. Karia shall not, during such term, be enti....
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....eriod, the CEO shall be responsible for the day to day management of the Company excluding solely the internal audit and the strategy and business development of the Company for which the Managing Director shall be responsible. Accordingly all the powers which are not delegated to the managers of the Company pursuant to the Delegation of Powers Policy, as may be amended by the Board from time to time, shall be delegated to the CEO to the extent such powers fall within his duties as aforesaid." "17. PROCEDURE FOR FAIR MARKET VALUATION 17.1 Notwithstanding anything contained in this Agreement, all references in this Agreement to Fair Market Value shall be the fair market value as determined, applying the definition of EBITDA, Net Financial Indebtedness (NFI) and Net Working Capital (NWC) set forth under Schedule X, by any one of the following four accounting firms settled in India: (a) KPMG (b) Ernst & Young; (c) PriceWaterhouseCoopers; (d) Deloitte 17.2 The accounting firm shall be chosen from among those indicated under clause 17.1 above by the Party that, according to clauses 23 and 24, is called by the other Party to sell, in whole or in part its share participat....
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....al breach of any provisions, obligations, covenants, conditions and undertakings under this Agreement , or in the event of insolvency or bankruptcy of the Defaulting Party or if the substantial undertaking or assets of the Defaulting Party is under receivership or any other equivalent status, it shall be considered as an event of default ("Event of Default"). 23.2 In such an event, the other party ("Non Defaulting Party") may give notice of the same ("Determination Notice") to the Defaulting Party. 23.3 The Defaulting Party shall have a period of 60(sixty) calendar days from the receipt of the Determination Notice (or Such further period as the Non Defaulting Party may agree in writing) to rectify the Event of Default(" Rectification Period"). It is hereby clarified that this clause 23.3 is not applicable if the Event of Default is represented by the insolvency or bankruptcy of the defaulting Party in which case the Non Defaulting Party may forthwith serve the EOD Notice to the Defaulting Party. 23.4 If upon expiry of the Rectification Period, the Event of Default has not been so rectified the Non Defaulting Party may require the Defaulting Party by written notice("EOD Notice....
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....e London Court of International Arbitration ("LCIA") as amended from time to time. 27.1.3 The arbitral tribunal ("Tribunal") shall consist of one (1) arbitrator, to be appointed by the LCIA. The arbitrator shall be from a neutral nationality, i.e. from a nationality and origin other than any of the Parties. 27.1.4 The seat of the arbitration shall be London, United Kingdom. 27.1.5 The language to be used in the arbitration shall be English. 27.1.6 The law applicable and governing the arbitration agreement (proper law of the arbitration agreement) and in all respects including the conduct of the proceedings shall be English Law. If the Institution above named ceases to exist or is unable for any reason to administer the arbitration proceedings then the arbitration shall be conducted in accordance with the (English) Arbitration ACT 1996 as amended from time to time or any statute that may replace the said Act. 27.1.7 Parties expressly agree that Part I of the (Indian) Arbitration and Conciliation Act, 1996 (as amended from time to time and any statutory enactment thereof) shall have no application to the arbitration agreement or the conduct of arbitration or to the setting ....
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....ll February 2012, Ms. Farise sought to convene a board-meeting to finalise one Mr. Brunetti's appointment as CFO of Ravin, which was assented to by the Respondent's Directors, but not signed by the Appellant's Directors. Things reached a head on 31.01.2012 when the employees of the company went on a strike at Ravin's Akruti office. By February 2012, the Appellants and Respondent No.1 were at loggerheads, as a result of which Respondent No.1 issued a request for arbitration in terms of clause 27 of the JVA, claiming that the Appellants had committed 'material breaches' of the JVA, inter alia, by ousting Respondent No.1 from the control of Ravin altogether. On 26.03.2012, the Appellants responded to the request for arbitration and included several counter claims. Each party claimed that the other had committed material breaches, as a result of which the successful party in the arbitration would be entitled under the JVA to buy out the other party at a 10% premium or discount (as the case may be). Given the fact that the JVA required service of a 'Determination Notice' which alleged material breaches, such notice was served by Respondent No.1 on the Appellants on 26.03.2012. Sixty day....
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.... Agreement". 83. The Tribunal concludes that these wordsthemselves do not prohibit the Claimant from selling cables directly in India. Such direct sales might still amount to a breach of Clause 8 or indeed Clause 20 of the JVA, but direct sales as a stand-alone activity is not an investment, acquisition or participation in the Cable Business in India. 84. It seems to the Tribunal that each of theseexpressions connotes different forms of long term engagement, arrangement or commitment involving either an injection or exchange of capital or know how on the part of the investor, acquirer or participator in the sphere of the activities identified by the compendious definition of Cable Business in India. 85. A person who concludes a contract of sale ofgoods to another counter-party is not in accordance with ordinary parlance investing, acquiring or participating in the Cable Business in India. 86. Therefore, the Tribunal concludes that on a trueconstruction of the JVA simply by applying the ordinary meaning of the words deployed together with the contractual definition, the Respondents do not succeed in their primary submission namely that the conclusion of one or more contracts....
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....hich the Respondents might contend that ACPL is Controlled by the same person, namely Prysmian Spa, who directly or indirectly Controls the Claimant so as to come within the parameters of sub-paragraph (c) of the definition of Affiliate." 10. The learned arbitrator then construed clause 23, which speaks of 'material breaches' by the parties, as follows: "132. The Tribunal's conclusions are as follows: 1) Clauses 23.1 and 23.2 do require the giving of a Determination Notice of an Event of Default by the Non Defaulting Party, if indeed the Non Defaulting Party wishes to make complaint, and if, ultimately, the Non Defaulting Party wishes to invoke the provisions of Clauses 23.4 and 23.7, even in circumstances where the Non Defaulting Party contends that the material breach is irremediable; 2) Clause 23.3 does require the Non Defaulting Party to give the Defaulting Party a period of 60 days, the Rectification Period, to rectify the Event of Default even in a case where the Non Defaulting Party alleges that the Event of Default is irremediable. The only exception to this in Clause 23.3 is with respect to what might be called events of insolvency, which amount to Events of D....
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....he arbitrator's ruling on jurisdiction was concerned, it was held that a dispute regarding the right to register the 'Ravin' trademark falls outside the scope of the arbitration clause under the JVA. He further held that the trademark licence agreements contained arbitration clauses which provided for disputes to be referred to arbitration in Milan, Italy under Italian law, and this being the case, any dispute in relation to these agreements would be outside the ken of the arbitration clause contained in the JVA. 12.The 'Second Partial Final Award' dated 19.12.2013 then dealt with which of the parties materially breached the terms and conditions of the JVA. The claims, in this respect, made by Respondent No.1, were disposed of as follows: "199. The Tribunal's findings and conclusions in relation to the particulars of the Claimant's allegations of material breach are set out below. The Tribunal finds that: 1) The Respondents interfered with the proper and effective functioning of the CEO by refusing to implement and/or by preventing the implementation of the Board of Directors' resolution empowering the CEO to operate Ravin's bank accounts in material breach of JVA Clauses 12 a....
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....re rectifiable and, in any event, by the end of the Rectification Period, i.e. 27 April 2012, and by the end of the extended period for rectification, i.e. 6 July 2012, the Respondents had not rectified any of their breaches. On the contrary, the Claimant submits that during the period between 28 February 2012 and 6 July 2012, the Respondents continued to breach the JVA by conduct which was calculated to destroy the relationship of trust and confidence between the parties and completely remove or render redundant any element of Claimant control over Ravin. As stated above, however, these post-Request breaches are not the subject of this Award (see, inter alia, Claimant's CS §§730-737). 201. The Respondents do not contend that theyrectified any of the alleged breaches of the JVA by 6 July 2012. 202. The Tribunal concludes that, in relation to thematerial breaches committed by the Respondents, the Respondents failed to rectify those breaches within the extended period for rectification, i.e. by 6 July 2012." 13.So far as the counter claims of the Appellants were concerned, the arbitrator dealt with the effect of Prysmian SA acquiring ACPL, which was a competing busines....
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....elevant facts and this will include a parties' reaction to the events at the time. xxx xxx xxx 237. The Tribunal ultimately concluded that the Respondent did not adduce any credible evidence of actual serious adverse impact. 238. It is true that there was some evidence (albeit mainly dating back to 2008-2009) of occasional instances of both companies tendering for the same business. Yet there was no reliable evidence that business had been lost from Ravin to ACPL post the Draka acquisition, or that there had been any diversion of business from Ravin to ACPL or that there had been any targeting of Ravin's business by ACPL or indeed vice versa. 239. In the end the two companies operate in a verydifferent space. ACPL is a small specialist cable business with a turnover of EUR 7-7.5m per annum. This is approximately 10% of that of Ravin. ACPL operates principally in the area of instrumentation cables. Ravin operates principally in the area of power and control cables. Yet further, a large part of the small turnover of ACPL constitutes exports from ACPL to its Omani shareholder. This renders the notion of serious adverse harm by reference to ACPL's turnover even more remote. ....
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....gement as stated in the First Partial Award. Indeed the Respondents have not even addressed the requirement identified in paragraph 84 of the First Partial Final Award but instead focused on the length or duration of the relationship and whether or not each relationship was exclusive or nonexclusive. This is not sufficient. For the avoidance of doubt the Tribunal concludes that there was no satisfactory basis on which it could be concluded that these Agency Agreements involved an injection or exchange of capital or know how on the part of the investor, acquirer or participator. They are best analysed as classic sales distribution/agency agreements pursuant to which an agent receives a sales commission in return for the promotion and conclusion of identified types of sales in India. xxx xxx xxx 273. Making every conceivable allowance in favour ofthe Respondents, the Tribunal concludes that the Respondents (perhaps for understandable reasons following the First Partial Final Award) have tried to alter their case and now advance a case that the fact of direct sales amounts to a material breach of Clauses 8 and 20 of the JVA. That was not advanced in the Determination Notice or in ....
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....are of her responsibilities to both companies and did not at any time pass on confidential or other information to ACPL from Ravin or from ACPL to Ravin. 285. The Respondents did not cross examine MsFarise on this important evidence. It is accepted by the Tribunal. 286. The Respondents instead in their ClosingSubmissions do not address the question of evidence of actual breach but instead try to build up a case of surmise or inference. The Respondents rely upon the fact that Prysmian referred to ACPL and Ravin as part of "Prysmian India". They also rely upon the fact that they contend that the appointment of Ms Farise to ACPL was covertly carried out. The first point leads nowhere. It is not evidence of breach of the JVA. The second point is in any event rejected by the Tribunal. As has been referred to above in the context of the analysis of the Claimant's allegations of material breach, the Tribunal finds that Ms. Farise did inform Mr. Karia of her appointment at ACPL. In the first instance Mr. Karia congratulated her and only objected later as the power struggle grew and this was used as a weapon in order to try to have Ms. Farise excluded from the Ravin Board." 16.So far....
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....nnot be said to be a material breach by the Claimant. That is unsustainable." 17. Holding thus, the learned sole arbitrator concluded that none of the counter claims were made out, as a result of which they were all dismissed. 18.The Third Partial Final Award was delivered on 14.01.2015. Prior to this award, on 23.06.2014, the Karias, through their legal counsel, informed the tribunal that they would no longer be represented by M/s Nishith Desai Associates. This was the prelude to Shri Vijay Karia writing to the LCIA Court on 28.09.2014, a few days before the hearing fixed before the arbitrator, seeking revocation of the appointment of the arbitrator, on the ground of alleged lack of impartiality or independence. At the hearing fixed on 1st-2nd October 2014, Shri Vijay Karia did not appear. On 10.10.2014, the LCIA Court communicated to the tribunal that it had dismissed the challenge made to the arbitrator on the ground that the said application was made out of time under the provisions of the LCIA Rules. The award then went on to address some of the written submissions dated 02.06.2014 of Shri Vijay Karia. The learned arbitrator explained how he was not 'functus officio' with r....
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....he shares; why Ravin's 49% stake in 'Power Plus' was excluded for purposes of valuation as clause 17.1 of the JVA and the formula stated in Schedule X would have to be strictly followed; and as to what then is the fair market value of the shares of the Appellants in Ravin that was to be bought out by the Respondent No. 1. 20.Ultimately, the final relief granted by the said award was as follows: "FINDS, HOLDS, ORDERS AND DECLARES as follows: 1) The Respondents do transfer to the Claimant 10,252,275 shares held by them to the Claimant the Discounted Price of INR 63.9 per share aggregating to INR 655,200,000. 2) The Third Respondent, Mr. Karia (who holds Power of Attorney executed by each Existing shareholder) do forthwith and without delay execute the requisite transfer forms for transfer of 10,252,275 shares in favour of the Claimant. 3) The Third Respondent and the Twelfth Respondent, Mr. Piyush Karia, who purport to be and continue to act as director of the Company, do forthwith and without delay: a) Convene and hold a meeting of the Board of Directors of the Company not later than 21 days after the date of this Final Award limited to noting and registering the transf....
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.... were made under Section 48 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Arbitration Act"). 22.The learned single Judge, in the impugned judgment, recorded the arguments of both parties, dealt with the allegation of bias against the arbitrator and all other objections raised by the Appellants to the award, but finally found that the award must be recognised and enforced as the objections do not fall within any of the neat legal pigeonholes contained in Section 48 of the Arbitration Act. 23.As Section 50 of the Arbitration Act does not provide an appeal when a foreign award is recognised and enforced by a judgment of a learned Single Judge of a High Court, the Appellants have appealed against the said judgment under Article 136 of the Constitution of India. 24.Before referring to the wide ranging arguments on both sides, it is important to emphasise that, unlike Section 37 of the Arbitration Act, which is contained in Part I of the said Act, and which provides an appeal against either setting aside or refusing to set aside a 'domestic' arbitration award, the legislative policy so far as recognition and enforcement of foreign awards is that an a....
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.....Dr. Abhishek Manu Singhvi, Senior Advocate, led the charge so far as the Appellants are concerned. Ably assisted by Shri Nakul Dewan on the law, the learned Senior Advocates argued a large number of points which they sought to put into three legal pigeonholes, namely, the pigeonhole contained in Section 48(1)(b) of the Arbitration Act, and that the foreign award would be contrary to the 'public policy of India' [as under Section 48(2)(b) of the Arbitration Act] in two respects: (1) that it would be in contravention of the fundamental policy of Indian law; and (2) that in several respects it would violate the most basic notions of justice. 26.Dr. Singhvi's arguments were as follows: (1)That the arbitral tribunal entirely failed to deal with the Appellants' counter claim pertaining to the incorporation of one Jaguar Communication Consultancy Services Private Limited (hereinafter referred to as "Jaguar"), which would show that, in material breach of the non-compete provisions of the JVA, this company was set up in India by Respondent No.1 to do business in the manufacture and sale of cables, in competition with the joint venture company, i.e. Ravin. (2)That the tribunal failed....
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...., instead of which, a 2017 award took a date of September 2014 which date in any case expired by the end of December 2014. (10) That the ruling contained in the First and Second Partial Final Awards regarding interpretation of clause 21 of the JVA were inconsistent and irreconcilable. (11) That a private communication had been made of the outcome of the arbitration by the tribunal two months prior to the award, published through an agent of Respondent No.1, one M/s Gilbert Tweed Associates, which would show that Respondent No.1 knew that the Second Partial Final Award would be in its favour. The mere undertaking to terminate the engagement of M/s Key2People as the agent, who in turn had employed M/s Gilbert Tweed Associates, and an apology made by Respondent's counsel, ought not to have been held to have been sufficient to condone this lapse by the learned sole arbitrator. (12) That the award is in contravention of the Foreign Exchange Management Act, 1999 (hereinafter referred to as "FEMA") in that it directed the sale of shares of Ravin at a 10% discount, which would be in the teeth of rule 21(2)(b)(iii) of the Foreign Exchange Management (Non-Debt Instrument) Rules, 201....
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....icle 142 of the Constitution of India. 30.Shri Kapil Sibal, learned senior advocate appearing on behalf of the Respondent No.1, read to us in copious detail each of the four awards delivered by the arbitral tribunal. He argued that each and every aspect of the matter that was argued on both sides was considered in detail in each of the said awards. He stressed the fact that though available, no challenge was ever made in the courts in England to the four awards. He defended the judgment of the learned Single Judge of the High Court and said that if the awards were read, it would be clear that the arbitrator adopted an extremely balanced approach, despite extreme provocation from Shri Vijay Karia, who only started alleging bias when he realized that the 'Second Partial Final Award' relating to who was in material breach, would be decided against him. Despite this, the learned arbitrator dispassionately considered every single claim and counter-claim made by the parties. This being the case, none of the grounds mentioned in Section 48 of the Arbitration Act would be available in the form of objections to such well-reasoned and balanced awards. In particular, Shri Sibal stressed tha....
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.... learned arbitrator and dismissed, inter alia on the ground that ouster was not at all pleaded by the Appellants. So far as the Ravin trademark is concerned, it is clear that the Appellant's own counsel made it clear that he would not be pressing the point - the point being as to whether it was at all open to go into registration of trademark of Ravin under separate license agreements which had separate arbitration clauses for arbitration in Italy. This was argued by both sides and dealt with by the arbitrator as a jurisdictional issue which was turned down by the arbitrator stating that the registration of the Ravin trademark was an issue which would be outside the JVA and hence not arbitrable. So far as ACPL was concerned, the learned arbitrator made it clear that Shri Vijay Karia knew all along that ACPL would come to Respondent No.1 as a result of the 'Draka acquisition' and never objected, but in fact congratulated the Respondent No.1 on making such acquisition. That ACPL was in a competing business was taken much later as an afterthought, Shri Vijay Karia admitting in cross-examination that ACPL's business was so small that it could be disregarded altogether. Also, Shri Sibal....
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....dered material breach with an even hand and arrived at the obvious conclusion on facts that since the CEO was never allowed to function, it was the Appellants and not the Respondent No.1 who had materially breached the terms of the JVA. Shri Sibal then went into the bogey raised re M/s Gilbert Tweed Associates. He maintained that the Respondent No.1 had no idea as to who M/s Gilbert Tweed Associates was and came to know that the agent, M/s Key2People, who was employed by the Respondent No.1, had in turn employed M/s Gilbert Tweed Associates, who published an advertisement to employ certain persons. From this, to jump to and try to make out a ground that the arbitrator was biased is a huge leap not warranted either in fact or law. Shri Sibal then argued that the award, in that it directed a sale of shares at a 10% discount, did not in any manner contravene the Foreign Exchange Management Act, 1999 and Rules thereunder. He took us through the relevant Rules and argued that unlike the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as "FERA"), FEMA did not contain Section 47 of FERA which voided agreements that were made contrary to FERA. According to him, the FEMA regi....
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....xxx (2) Enforcement of an arbitral award may also be refused if the court finds that- (a) the subject-matter of the difference is not capableof settlement by arbitration under the law of India; or (b) the enforcement of the award would be contrary tothe public policy of India. Explanation 1.-For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,- (i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice. Explanation 2.-For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute." 34.One of the first judgments which construed pari materia provisions in the Foreign Awards Act, 1961 was the celebrated judgment in Renusagar (supra). This judgment was given pride of place in the recent judgment of Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of....
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....V and the court can, on its own motion, refuse recognition and enforcement of a foreign award for two additional reasons set out in sub-clauses (a) and (b) of clause (2) of Article V. None of the grounds set out in sub-clauses ( a ) to ( e) of clause (1) and sub- clauses ( a ) and ( b) of clause (2) of Article V postulates a challenge to the award on merits. 35. Albert Jan van den Berg in his treatise The New York Arbitration Convention of 1958 : Towards a Uniform Judicial Interpretation, has expressed the view: "It is a generally accepted interpretation of the Convention that the court before which the enforcement of the foreign award is sought may not review the merits of the award. The main reason is that the exhaustive list of grounds for refusal of enforcement enumerated in Article V does not include a mistake in fact or law by the arbitrator. Furthermore, under the Convention the task of the enforcement judge is a limited one. The control exercised by him is limited to verifying whether an objection of a respondent on the basis of the grounds for refusal of Article V(1) is justified and whether the enforcement of the award would violate the public policy of the law of his....
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....d is set to be enforced. There is nothing to indicate that the expression "public policy" in Article V(2) (b) of the New York Convention and Section 7(1)(b) (ii) of the Foreign Awards Act is not used in the same sense in which it was used in Article I(c) of the Geneva Convention of 1927 and Section 7(1) of the Protocol and Convention Act of 1937. This would mean that "public policy" in Section 7(1)(b)(ii) has been used in a narrower sense and in order to attract the bar of public policy the enforcement of the award must invoke something more than the violation of the law of India. Since the Foreign Awards Act is concerned with recognition and enforcement of foreign awards which are governed by the principles of private international law, the expression "public policy" in Section 7(1)(b)(ii) of the Foreign Awards Act must necessarily be construed in the sense the doctrine of public policy is applied in the field of private international law. Applying the said criteria, it must be held that the enforcement of a foreign award would be refused on the ground that it is contrary to public policy if such enforcement would be contrary to (i) fundamental policy of Indian law; or (ii) the in....
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.... aside, if it is patently illegal" does not lay down correct law and is overruled. xxx xxx xxx 45. Moreover, Section 48 of the 1996 Act does not give an opportunity to have a "second look" at the foreign award in the award enforcement stage. The scope of inquiry under Section 48 does not permit review of the foreign award on merits. Procedural defects (like taking into consideration inadmissible evidence or ignoring/rejecting the evidence which may be of binding nature) in the course of foreign arbitration do not lead necessarily to excuse an award from enforcement on the ground of public policy. 46. In what we have discussed above, even if it be assumed that the Board of Appeal erred in relying upon the report obtained by the buyers from Crepin which was inconsistent with the terms on which the parties had contracted in the contract dated 12-5-1994 and wrongly rejected the report of the contractual agency, in our view, such errors would not bar the enforceability of the appeal awards passed by the Board of Appeal." 36.In LMJ International Ltd. v. Sleepwell Industries (2019) 5 SCC 302, an ex-parte award was passed in London which was sought to be executed by the Respondents ....
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....cted, being barred by constructive res judicata, as has been justly observed by the High Court in the impugned judgment. xxx xxx xxx 20. Suffice it to observe that the Arbitral Tribunal has considered all aspects of the matter and even if it has committed any error, the same could, at best, be a matter for correction by way of appeal to be resorted to on grounds as may be permissible under the English law, by which the subject arbitration proceedings are governed. We may not be understood to have expressed any opinion on the correctness of those issues." 37.At this stage it is important to advert to amendments that were made by the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter referred to as the "2015 Amendment Act"). Section 48 was amended to delete the ground of "contrary to the interest of India". Also, what was important was to reiterate the Renusagar (supra) position, that the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute (vide Explanation 2 to Section 48(2)). 38.It will be noticed that in the context of challenge to domestic awards, Section 34 of the Arbitrat....
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....round of "patent illegality", which, as we have seen, would not apply to international commercial arbitrations that are decided under Part II of the 1996 Act. To bring in by the backdoor grounds relatable to Section 28(3) of the 1996 Act to be matters beyond the scope of submission to arbitration under Section 34(2) (a)(iv) would not be permissible as this ground must be construed narrowly and so construed, must refer only to matters which are beyond the arbitration agreement or beyond the reference to the arbitral tribunal." This statement of the law applies equally to Section 48 of the Arbitration Act. 39.Indeed, this approach has commended itself in other jurisdictions as well. Thus, in Sui Southern Gas Co. Ltd. v. Habibullah Coastal Power Co. (2010) SGHC 62, the Singapore High Court, after setting out the legislative policy of the Model Law that the 'public policy' exception is to be narrowly viewed and that an arbitral award that shocks the conscience alone would be set aside, went on to hold: "48. It is clear, therefore, that in order for SSGC to have succeeded on the public policy argument, it had to cross a very high threshold and demonstrate egregious circumstances su....
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....the inferences to be drawn from the history of the Convention as a whole. The general pro-enforcement bias informing the Convention and explaining its supersession of the Geneva Convention points toward a narrow reading of the public policy defense. An expansive construction of this defense would vitiate the Convention's basic effort to remove preexisting obstacles to enforcement. See Straus, Arbitration of Disputes between Multinational Corporations, in New Strategies for Peaceful Resolution of International Business Disputes 114-15 (1971); Digest of Proceedings of International Business Disputes Conference, April 14, 1971, in id. At 191 (remarks of Professor W. Reese). Additionally, considerations of reciprocity- considerations given express recognition in the Convention itself - counsel courts to invoke the public policy defense with caution lest foreign courts frequently accept it as a defense to enforcement of arbitral awards rendered in the United States. We conclude, therefore, that the Convention's public policy defense should be construed narrowly. Enforcement of foreign arbitral awards may be denied on this basis only where enforcement would violate the forum state's m....
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.... 339 U.S. 306, 314 (1950)." 42.In Certain Underwriters at Lloyd's London v. BCS Ins. Co. 239 F.Supp.2d 812 (2003), the US District Court, N.D Illinois referred to the Federal Arbitration Act and went on to hold that the review of a panel decision is "grudgingly narrow". (See paragraphs 2 and 3). 43.In Karaha Bodas Co., L.L.C v. Perusahaan Pertambagan Minyak 364 F.3d 274 (2004), the United States Court of Appeals for the 5th Circuit analysed the New York Convention thus: "The New York Convention provides a carefully structured framework for the review and enforcement of international arbitral awards. Only a court in a country with primary jurisdiction over an arbitral award may annul that award. Courts in other countries have secondary jurisdiction; a court in a country with secondary jurisdiction is limited to deciding whether the award may be enforced in that country. The Convention "mandates very different regimes for the review of arbitral awards (1) in the countries in which, or under the law of which, the award was made, and (2) in other countries where recognition and enforcement are sought." Under the Convention, "the country in which, or under the arbitration law of whi....
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.... the Convention. The court examined the distinction between awards rendered in the same nation as the site of the arbitral proceeding and those rendered in a foreign country. The court concluded that more flexibility was available when the arbitration site and the site of the confirmation proceeding were within the same jurisdiction. Id. at 22-23. However, "the [C]onvention is equally clear that when an action for enforcement is brought in a foreign state, the state may refuse to enforce the award only on the grounds explicitly set forth in Article V of the Convention." Id. at 23. xxx xxx xxx In the same vein, in Parsons & Whittemore Overseas Co., Inc. v. Societe Generale de L'Industrie du Papier (RAKTA), 508 F.2d 969 (2d Cir.1974), the Court of Appeals reviewed the grounds for refusal contained in the Convention and said that the public policy defense is available "only where enforcement would violate the forum state's most basic notions of morality and justice." Id. at 974. Similarly, the court noted that an award cannot be enforced under the Convention where it is "predicated on a subject matter outside the arbitrator's jurisdiction," but the Convention does not....
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....c awards, provided that the minimal proof requirements of Article IV are satisfied. Articles V(I) and V(2) then provide exceptions to this affirmative obligation, beginning with the prefatory statement that "[r]ecognition and enforcement of the awards may be refused" in certain circumstances. The most significant aspect of this provision is its structure, which is to establish an affirmative obligation to recognize arbitral awards, subject to specified exceptions - but not to establish an affirmative obligation to deny recognition. Critically, the Article V(I) exceptions are just that: exceptions to an affirmative obligation, and not affirmative obligations in their own right. Although the matter can be debated, the text of Article V supports this structural conclusion. The English language text of Article V is unmistakably permissive, providing that Contracting States "may" refuse recognition of an award; the Russian and Chinese versions of the Convention are identical in meaning. The Spanish version of Article V also indicates that recognition may be denied, without indicating that it must be. The only exception is the French text, which has been relied on by some authorities a....
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....uired documents the court has no discretion but to recognise and enforce a New York Convention award unless the party opposing enforcement proves one or more of the grounds specified in s.103 of the Arbitration Act 1996. These grounds of refusal are exhaustive, and if none of the grounds is present the award will be enforced. Much has been written about these grounds and a detailed analysis of their international application is beyond the scope of this book but they will be treated summarily in this chapter. The onus of proving the existence of a ground rests upon the party opposing enforcement, but that may not be the end of the matter. There is an important public policy in the enforcement of awards and the courts should only refuse to enforce an award under s.103 in a clear case. xxx xxx xxx 8-035 Discretion The court also has a discretion to allow enforcement even in circumstances where one or more of the grounds are made out. This discretion is not to be exercised arbitrarily however because the word "may" in s.103(2) is intended to refer to the corresponding word in the New York Convention. In any event the discretion is a very narrow one. If one or more of the grounds ....
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.... award. Article II of the Convention and ss.100(2) and 102(1) of the 1996 Act serve to underline the (in any event obviously fundamental) requirement that there should be a valid and existing arbitration agreement behind an award sought to be enforced or recognised. Absent some fresh circumstance such as another agreement or an estoppel, it would be a remarkable state of affairs if the word "may" enabled a court to enforce or recognise an award which it found to have been made without jurisdiction, under whatever law it held ought to be recognised and applied to determine that issue. 69. The factors relied upon by Dallah in support of itssuggestion that a discretion should be exercised to enforce the present award amount for the most part to repetition of Dallah's arguments for saying that there was an arbitration agreement binding on the Government, or that an English court should do no more than consider whether there was a plausible or reasonably supportable basis for its case or for the tribunal's conclusion that it had jurisdiction. But Dallah has lost on such points, and it is impossible to redeploy them here. The application of s.103(2) and Article V(1) must be approached....
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....uinness [2006] 1 Lloyd's Rep 701, para 25 per Lord Phillips CJ. Another possible example would be where there has been no prejudice to the party resisting enforcement: China Agribusiness Development Corpn v Balli Trading [1998] 2 Lloyd's Rep 76. But it is not easy to see how that could apply to a case where a party had not acceded to an arbitration agreement. 128. There may, of course, in theory be cases wherethe English court would refuse to apply a foreign law which makes the arbitration agreement invalid where the foreign law outrages its sense of justice or decency (Scarman J's phrase in In the Estate of Fuld, decd (No 3) [1968] P 675, 698), for example where it is discriminatory or arbitrary. The application of public policy in the New York Convention (article V(2)(b)) and the 1996 Act (section 103(3)) is limited to the nonrecognition or enforcement of foreign awards. But the combination of (a) the use of public policy to refuse to recognise the application of the foreign law and (b) the discretion to recognise or enforce an award even if the arbitration agreement is invalid under the applicable law could be used to avoid the application of a foreign law which is contrary t....
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....opposed to compulsion. 29. In re, Nichols v. Baker: 59 LJ Ch 661, Cotton L.J. observed that '"May' can never mean must, so long as the English language retains its meaning; but it gives a power and then it may be a question, in what cases, when any authority or body has a power given it by the word 'may', it becomes its duty to exercise that power". 30. In Official Liquidator v. Dharti Dhan (P) Ltd.: (1977) 2 SCC 166 the Supreme Court had explained that in certain cases where the legal and factual context in which the discretionary power is to be exercised is specified, it is also annexed with a duty to exercise it in that manner. Keeping the aforesaid in mind, there can be no cavil that since Section 48 of the Act enables the court to refuse enforcement of a foreign award on certain grounds, this court would be required to do so; however, if there are good reasons founded on settled principles of law, the court is not precluded from declining the same. The word "may" in Section 48(1) and (2) of the Act must be interpreted as used in a sense so as not to fetter the courts to refuse enforcement of a foreign award even if the grounds as set out in Section 48 are established, prov....
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....tates to retain some sovereign control over enforcement of foreign awards in their territory. The ground that enforcement of an award opposed to the national public policy would be declined perhaps provides the strongest expression of a Sovereign's reservation that its executive power shall not be used to enforce a foreign award which is in conflict with its policy. The other grounds mainly relate to the structural integrity of the arbitral process with focus on inter party rights. 38. In terms of Sub-section (1) of Section 48 of the Act, the Court can refuse enforcement of a foreign award only if the party resisting the enforcement furnishes proof to establish the grounds as set out in Section 48(1) of the Act. However, the court may refuse enforcement of a foreign award notwithstanding that a party resisting the enforcement has not provided any/sufficient proof of contravention of public policy. In such cases, the Court is not precluded from examining the question of public policy suo motu and would refuse to enforce the foreign award that is found to offend the public policy of India. The approach of the court while examining whether to refuse enforcement of a foreign awar....
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.... for example, that a party has been unable to present its case before the arbitrator, and which ground is capable of waiver or abandonment, or, the ground being made out, no prejudice has been caused to the party on such ground being made out, a Court may well enforce a foreign award, even if such ground is made out. When it comes to the "public policy of India" ground, again, there would be no discretion in enforcing an award which is induced by fraud or corruption, or which violates the fundamental policy of Indian law, or is in conflict with the most basic notions of morality or justice. It can thus be seen that the expression "may" in Section 48 can, depending upon the context, mean "shall" or as connoting that a residual discretion remains in the Court to enforce a foreign award, despite grounds for its resistance having been made out. What is clear is that the width of this discretion is limited to the circumstances pointed out hereinabove, in which case a balancing act may be performed by the Court enforcing a foreign award. The Natural Justice Ground under Section 48 55. Shri Sibal has argued that the expression "or was otherwise unable to present his case" occurring in S....
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....l must grant them access to the evidence and arguments submitted by the other side. Affording a party the opportunity to make submissions or to give its view without also informing it of the opposing side's claims and arguments typically constitutes a violation of due process, unless specific non-disclosure rules apply (e.g., such disclosure would constitute a violation of trade secrets or applicable legal privileges). In practice, national courts have afforded arbitral tribunals considerable leeway in setting and adjusting the procedures by which parties respond to one another's submissions and evidence, reasoning that there were "several ways of conducting arbitral proceedings." Accordingly, absent any specific agreement by the parties, the arbitral tribunal has wide discretion in arranging the parties' right to comment, permitting or excluding the introduction of new claims, and determining which party may have the final word. b) Right to Comment on Evidence Known to or Determined by the Tribunal The parties' right to comment also extends to facts that have not been introduced in the proceedings by the parties, but that the tribunal has raised sua sponte, provided it was en....
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.....g., Judgment of 5 July 2011, 34 SCH 09/11, II(5)(c)(bb) (Oberlandesgericht Munchen)]; and (b) a party is entitled to a decision by the arbitral tribunal that takes its position into account insofar as relevant [See, e.g., Judgment of 5 October 2009, 34 Sch 12/09 (Oberlandesgericht Munchen)]. Other authorities provide comparable formulations of the content of the right to be heard [See, e.g., Slaney v. Int'l Amateur Athletic Foundation, 244 F.3d 580, 592 (7th Cir. 2001) (at p. 3225) Similarly, in Redfern and Hunter (supra): "11.73. The national court at the place of enforcement thus has a limited role. Its function is not to decide whether or not the award is correct, as a matter of fact and law. Its function is simply to decide whether there has been a fair hearing. One mistake in the course of the proceedings may be sufficient to lead the court to conclude that there was a denial of justice. For example, in a case to which reference has already been made, a US corporation, which had been told that there was no need to submit detailed invoices, had its claim rejected by the Iran-US Claims Tribunal, for failure to submit detailed invoices! The US court, rightly it is suggested....
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....rgument in support of his own case. 5. Each party must have a reasonable opportunity totest his opponent's case by cross-examining his witnesses, presenting rebutting evidence and addressing oral argument. 6. The hearing must, unless the contrary is expresslyagreed, be the occasion on which the parties present the whole of their evidence and argument." 58.A recent Delhi High Court judgment in Glencore International AG v. Dalmia Cement (Bharat) Limited 2017 SCC OnLine Del 8932 puts it thus: "25. The inability to present a case as contemplated under section 48(1)(b) of the Act (which is pari materia to Article V(I)(b) of the New York Convention) must be such so as to render the proceedings violative of the due process and principles of natural justice. It is rudimentary that for a fair decision each party must have full and equal opportunity to present their respective cases and this includes due notice of proceedings. In the event a party opposing the enforcement of a foreign award is able to present sufficient proof of such infirmity in the arbitral proceedings, the courts may decline to enforce the foreign award. 26. A clear distinction needs to be drawn between case....
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....procedural directives of the decision-making body and then successfully claim that the procedures were unfair or violative of due process. Likewise, in Dongwoo Mann+Hummel Co. Ltd. v. Mann+Hummel GmbH (2008) SGHC 275, the Singapore High Court held: "145. A deliberate refusal to comply with a discovery order is not per se a contravention of public policy because the adversarial procedure in arbitration admits of the possible sanction of an adverse inference being drawn against the party that does not produce the document in question in compliance with an order. The tribunal will of course consider all the relevant facts and circumstances, and the submissions by the parties before the tribunal decides whether or not to draw an adverse inference for the nonproduction. Dongwoo also had the liberty to apply to the High Court to compel production of the documents under s 13 and 14 of the IAA, if it was not content with merely arguing on the question of adverse inference and if it desperately needed the production by M+H of those documents for its inspection so that it could properly argue the point on drawing an adverse inference. However, Dongwoo chose not to do so. 146. Further, th....
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....t include the cabling for the HVAC equipment. In "double-counting" in this respect, the Tribunal has awarded Imtech more than it asked for, or could reasonably ask for. GN submits that the double-counting is probably a very significant part of the EUR1,000,000 awarded, on the basis that the Tribunal had previously awarded a larger amount under the HVAC claim (Claim 1, VTC 1). Whatever the size of the double-counting may be, it is unlikely to be minimal. I am satisfied that GN has been caused substantial injustice by having, on the face of the Award, to pay more than it should to Imtech for extra work." This finding was given pursuant to Section 68 of the Arbitration Act, 1996 (U.K) by which a "serious irregularity" would lead to the award being set aside or remitted or being declared to be of no effect in whole or in part. 64.In Malicorp Limited v. Government of Arab Republic of Egypt (2015) EWHC 361 (Comm), the U.K Court held that the Government of Egypt had no warning of the manner in which the award was made. The Court held: "41. In these circumstances I have no doubt whatsoever that the award of damages under article 142 must have been a complete surprise to Egypt. So, too....
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....e English position; and Robert Morgan, The Arbitration Ordinance of Hong Kong: A Commentary (Butterworths Asia, 1997) on the position in Hong Kong, which also essentially reflects the English practice. As rightly observed in Weldon Plant Ltd v The Commission for the New Towns [2001] 1 All ER (Comm) 264 ("Weldon") at [22], "[a]n award should be read supportively ... [and] given a reading which is likely to uphold it rather than to destroy it". Similarly, in Vee Networks Ltd v Econet Wireless International Ltd [2005] 1 Lloyd's Rep 192, the court, at [90], held: Above all it is not normally appropriate for the court to try the material issue in order to ascertain whether substantial injustice has been caused. To do so would be an entirely inappropriate inroad into the autonomy of the arbitral process. xxx xxx xxx 65. The foregoing survey of case law and principles may be further condensed into the following core principles: (a) Parties to arbitration have, in general, a right to beheard effectively on every issue that may be relevant to the resolution of a dispute. The overriding concern, as Goff LJ aptly noted in The Vimeira ([45] supra), is fairness. The best rule of thumb to....
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....matic departure from the submissions, or involves an arbitrator receiving extraneous evidence, or adopts a view wholly at odds with the established evidence adduced by the parties, or arrives at a conclusion unequivocally rejected by the parties as being trivial or irrelevant, might it be appropriate for a court to intervene. In short, there must be a real basis for alleging that the arbitrator has conducted the arbitral process either irrationally or capriciously. To echo the language employed in Rotoaira ([55] supra), the overriding burden on the applicant is to show that a reasonable litigant in his shoes could not have foreseen the possibility of reasoning of the type revealed in the award. It is only in these very limited circumstances that the arbitrator's decision might be considered unfair. (e) It is almost invariably the case that parties proposediametrically opposite solutions to resolve a dispute. They may expect the arbitrator to select one of these alternative positions. The arbitrator, however, is not bound to adopt an either/or approach. He is perfectly entitled to embrace a middle path (even without apprising the parties of his provisional thinking or analysis) s....
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....g of the Award as its finding on cl 4.2 was the basis upon which the impugned findings in the Award (including the finding that Midea was not entitled to terminate the MBA) were made. I agreed with Midea that the Tribunal's finding on cl 4.2 was in breach of the rules of natural justice." 67.A Hong Kong Judgment reported as Hebei Import & Export Corporation v. Polytek Engineering Company Ltd. (1992) 2 HKC 205, found that the tribunal in the course of proceedings received communications from only one party, in the absence of the other, the other party being kept in the dark as to what those communications were. On this point, therefore it was held: "On the other hand, we think it is quite clear that the defendant did not have the opportunity of hearing what was presented to the Chief Arbitrator by the plaintiff's employees during the inspection of the equipment and hence was not able to present its side of the case before the experts prepared their report. This was to some extent mitigated by the provision of a copy of the experts' report and the chance to comment on it. But neither the reply from the Tribunal or the report mentioned what transpired during the briefing sessio....
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....e of the October 1998 contract, Olam's loss was not to be approached in the same way as if they were beneficial owners of the cargo. The point has, with respect, not been addressed...Since the whole process of arbitration is intended as a way of determining points at issue, it is more likely to be a matter of serious irregularity if on a central matter a finding is made on a basis which does not reflect the case which the party complaining reasonably thought he was meeting, or a finding is ambiguous, or an important issue is not addressed, than if the complaints go simply to procedural matters. Mr Young submitted that Ascot's real complaint is that its arguments were not accepted and that this cannot be an irregularity. He noted that there has been no application for permission to appeal. He also submitted that if the terseness of the Board's findings made it legitimate for Ascot to have requested further reasons, they could have asked for them but have not done so. On a fair reading of the award it seems to me that this is not case in which the tribunal has directed itself to, and rejected, the central issue argued by Ascot but has, in truth, missed it...But if an a....
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....consideration, why it was rejected. The process of arbitration is intended as a way of determining disputes and points at issue, and I agree with the sentiments expressed by the court in Ascot Commodities NV v Olam International Ltd [2002] CLC 277 and in Van der Giessen-de Noord Shipbuilding Division BV v Imtech Marine and Off shore BV [2009] 1 Lloyd's Rep 273 that it is a serious irregularity and a denial of due process which causes substantial injustice and unfairness to the parties, if an important issue, which the parties are entitled to expect to be addressed, is not in fact addressed. 34. Even if the Arbitrator finds in favor of B on all itsclaims of A's inability and failure to deliver the Products in compliance with the Relevant Standards and conforming to the contractual specifications, and A's failure to develop the Products pursuant to its contractual obligations, B's action against A and its claims for remedies in the Arbitration will fail, if the Limitation Defence succeeds. The Limitation Defence is a material point and issue which could have rendered the Award materially different, and the failure to consider it, or to explain the dismissal of the Limitation Defenc....
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....e if in the course of reaching its decision it disregarded the submissions and arguments made by the parties on the issues without considering the merits thereof. For this, it relied upon three Australian cases and an earlier judgment which considered these three cases. The Court then concluded: "53. As I have concluded earlier, an arbitrator's failure to consider material arguments or submissions is a breach of natural justice. In the present case, the Arbitrator had dismissed Front Row's counterclaim without considering the grounds of its counterclaim in full because he was under the misapprehension that Front Row had abandoned its reliance on the Representation. Had he not been mistaken, he would have had to decide whether or not the Representation was false. A decision that there had been a misrepresentation in regard thereto would have resulted in an award in favour of Front Row, assuming the other ingredients for a successful claim (viz, "reliance" and "detriment") were satisfied. It was not for me to delve further into the question whether Front Row's reliance upon the Representation would have succeeded but for the arbitrator's misrepresentation. It sufficed that the Arbi....
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....ourt in Thong Ah Fat held (at [19]), the general duty of a judicial body to explain its decision is ineluctably "a function of due process, and therefore of justice". While there are structural differences between a court and an arbitral tribunal, it cannot be gainsaid that arbitrations are subject to the same ideals of due process and justice. It bears mentioning that Kiefel J concluded that the requirement to give a reasoned award cannot be devoid of content and for that reason, he was content to adopt Donaldson LJ's statement in Bremer (see [101] above). 104. Therefore, in my view, the standards applicable to judges are assistive indicia to arbitrators. While the rules of natural justice must be applied rigorously in arbitrations as they are in court litigation, the practical realities of the arbitral ecosystem such as promptness and price are also important (see Soh Beng Tee at [63]). On this note, the following are clear from Thong Ah Fat: (a) The standard of explanation required in every casemust correspond to the requirements of the case. Costs and delays are relevant factors to consider when determining the extent to which reasons and explanations are to be set out in ....
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....spect of the dispute before him. Consideration of the pleaded issues is an essential feature of the rule of natural justice that is encapsulated in the Latin adage, audi alteram partem (see also Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR(R) 86 ("Soh Beng Tee") at [43], citing Gas & Fuel Corporation of Victoria v Wood Hall Ltd & Leonard Pipeline Contractors Ltd [1978] VR 385 at 386). Front Row is useful in so far as it demonstrates what must be shown to make out a breach of natural justice on the basis that the arbitrator failed to consider an important pleaded issue. It will usually be a matter of inference rather than of explicit indication that the arbitrator wholly missed one or more important pleaded issues. However, the inference - that the arbitrator indeed failed to consider an important pleaded issue - if it is to be drawn at all, must be shown to be clear and virtually inescapable. If the facts are also consistent with the arbitrator simply having misunderstood the aggrieved party's case, or having been mistaken as to the law, or having chosen not to deal with a point pleaded by the aggrieved party because he thought it unnecessary (notwithstand....
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....ed) 74.In BAZ v. BBA & Ors. (2018) SGHC 275, again with reference to Section 24(b) of the International Arbitration Act (Singapore), the Court approached the issue of natural justice as follows: "133. It is well established that to succeed in a claim under s 24(b) of the IAA, the claimant needs to establish the following four elements (see Soh Beng Tee at [29]; AKN v ALC 2015 at [48]): (a) which rule of natural justice was breached; (b) how it was breached; (c) in what way the breach was connected to the making of the award; and (d) how the breach prejudiced its rights. 134. The failure to consider an important issue that has been pleaded in an arbitration is a breach of natural justice because in such a case, the arbitrator would not have brought his mind to bear on an important aspect of the dispute before him (AKN v ALC 2015 at [46]). It will usually be a matter of inference rather than of explicit indication that the arbitrator wholly missed one or more important pleaded issues. However, this inference must be shown to be "clear and virtually inescapable" (AKN v ALC 2015 at [46]). The Court of Appeal cautioned against arguments dressed up to appear as breaches of natural j....
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....he consequences of the violation." 75. In Campos Brothers Farms v. Matru Bhumi Supply Chain Pvt. Ltd. (2019) 261 DLT 201, the Delhi High Court had to consider the enforcement of a foreign award. The arbitrator in the aforesaid case did not give any finding on maintainability of the arbitration proceedings, which was argued before her. In this fact circumstance, the Delhi High Court held: "55. In any case, the respondent nos. 1 and 2 had also made submissions on merit before the Arbitrator. Though the learned counsel for the petitioner submitted that the same were rightly excluded from consideration by the Arbitrator as the Arbitrator had never sought for the same, the Award does not reflect any such reason given by the Arbitrator for excluding them from consideration. The Arbitrator does not record a finding that she has intentionally ignored such submissions as they were filed belatedly or beyond what was permitted. In fact, as noted above, as per the Arbitrator no submission was filed by the respondents by 13.06.2016, which is factually incorrect. 56. In exercise of powers under Section 48 of the Act, this Court cannot consider the submissions made by the respondent nos. 1 a....
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....relating to maintainability of the arbitral proceedings was pigeon-holed not under Section 48(1)(b), but under the "public policy of India" ground, stating that such a thing would violate the most basic notion of justice. 76.Given the fact that the object of Section 48 is to enforce foreign awards subject to certain well-defined narrow exceptions, the expression "was otherwise unable to present his case" occurring in Section 48(1)(b) cannot be given an expansive meaning and would have to be read in the context and colour of the words preceding the said phrase. In short, this expression would be a facet of natural justice, which would be breached only if a fair hearing was not given by the arbitrator to the parties. Read along with the first part of Section 48(1)(b), it is clear that this expression would apply at the hearing stage and not after the award has been delivered, as has been held in Ssangyong (supra). A good working test for determining whether a party has been unable to present his case is to see whether factors outside the party's control have combined to deny the party a fair hearing. Thus, where no opportunity was given to deal with an argument which goes to the roo....
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....ances, such as the fact situation in the present case. Under no circumstance can any Court interfere with an arbitral award on the ground that justice has not been done in the opinion of the Court. That would be an entry into the merits of the dispute which, as we have seen, is contrary to the ethos of Section 34 of the 1996 Act, as has been noted earlier in this judgment.") It must always be remembered that poor reasoning, by which a material issue or claim is rejected, can never fall in this class of cases. Also, issues that the tribunal considered essential and has addressed must be given their due weight - it often happens that the tribunal considers a particular issue as essential and answers it, which by implication would mean that the other issue or issues raised have been implicitly rejected. For example, two parties may both allege that the other is in breach. A finding that one party is in breach, without expressly stating that the other party is not in breach, would amount to a decision on both a claim and a counterclaim, as to which party is in breach. Similarly, after hearing the parties, a certain sum may be awarded as damages and an issue as to interest may not be a....
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....nits in accordance with these rules or a person resident in India, may transfer such equity instruments or units so held by him in compliance with the conditions, if any, specified in the Schedules of these rules and subject to the terms and conditions prescribed hereunder: (3) A person resident in India holding equity instruments of an Indian company or units, may transfer the same to a person resident outside India by way of sale, subject to the adherence to entry routes, sectoral caps or investment limits, pricing guidelines and other attendant conditions as applicable for investment by a person resident outside India and documentation and reporting requirements for such transfers as may be specified by the Reserve Bank in consultation with the Central Government from time to time; xxx xxx xxx 21. Pricing guidelines - (1) The pricing guidelines specified in these rules shallnot be applicable for any transfer by way of sale done in accordance with Securities and Exchange Board of India regulations where the pricing is specified by Securities and Exchange Board of India. (2) Unless otherwise prescribed in these rules, theprice of equity instruments of an Indian company,....
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....f the principal objective of the New York Convention is to ensure enforcement of awards notwithstanding that the awards are not rendered in conformity to the national laws. Thus, the objections to enforcement on the ground of public policy must be such that offend the core values of a member State's national policy and which it cannot be expected to compromise. The expression "fundamental policy of law" must be interpreted in that perspective and must mean only the fundamental and substratal legislative policy and not a provision of any enactment. xxx xxx xxx 102. Although, this contention appears attractive, however, fails to take into account that there has been a material change in the fundamental policy of exchange control as enacted under FERA and as now contemplated under FEMA. FERA was enacted at the time when the India's economy was a closed economy and the accent was to conserve foreign exchange by effectively prohibiting transactions in foreign exchange unless permitted. As pointed out by the Supreme Court in Life Insurance Corporation of India v. Escorts Ltd. (supra), the object of FERA was to ensure that the nation does not lose foreign exchange essential for....
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.... or Rule would not arise as the award does not become void on that count. The fundamental policy of Indian law, as has been held in Renusagar (supra), must amount to a breach of some legal principle or legislation which is so basic to Indian law that it is not susceptible of being compromised. "Fundamental Policy" refers to the core values of India's public policy as a nation, which may find expression not only in statutes but also time-honoured, hallowed principles which are followed by the Courts. Judged from this point of view, it is clear that resistance to the enforcement of a foreign award cannot be made on this ground. 84.The Appellants, however, relied upon certain observations in Dropti Devi v. Union of India (2012) 7 SCC 499. In that case, a challenge was made to the constitutional validity of Section 3 of Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (hereinafter referred to as "COFEPOSA"), stating that by reason of the new legal regime articulated in FEMA, in replacement of FERA, the said provision has become unconstitutional in the changed situation.This submission was repelled by this Court stating: "66. It is true that provision....
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....ith effectively, inter alia, through the mechanism of preventive detention. From this to contend that any violation of any FEMA Rule would make such violation an illegal activity does not follow. In fact, even if the reasoning contained in this judgment is torn out of its specific context and applied to this case, there being no alleged smuggling activity which involves depletion of foreign exchange, as against foreign exchange coming into the country as a result of sale of shares in an Indian company to a foreign company, it does not follow that such violation, even if proved, would breach the fundamental policy of Indian law. Challenge to Enforcement of the Foreign Award in this case on facts 85.Dr. Singhvi and Shri Dewan arguing for the Appellants have raised fourteen submissions, all of which fall under Section 48(1)(b) read with Explanation 1 (ii) and (iii) to Section 48(2)(b) of the Arbitration Act, taken either cumulatively as grounds of objection or separately, depending upon the nature of the ground argued. We now deal with each of these grounds seriatim. I. The Tribunal failed to deal with the Appellants' counter-claim pertaining to the incorporation of Jaguar Communic....
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....with this case. In the Second Partial Final Award, the tribunal also recorded that the Appellants' case on clause 21.1 was limited to the acquisition of ACPL and direct sales into India. The argument of the Appellant, made at the fag end of the proceedings, that since the Respondent held 99.99 % shares of Jaguar, which is in a similar cable business as Ravin, as evidenced by the Memorandum and Articles of Association of Jaguar, is a case that has never been pleaded. This being the case, it is obvious that the arbitrator was within his jurisdiction not to deal with this so-called counter-claim at all. This objection, therefore, does not fall within any of the grounds mentioned in Section 48 and must, therefore, be rejected. II. The Tribunal failed to make a determination on the Appellants' counter-claim concerning ouster of the Appellants 88.According to the Appellants, the tribunal failed to make a determination on the Appellants' counter-claim that the Respondent's efforts to oust Appellant No.1 and his family from Ravin amounted to a breach of the JVA. In answer to this submission, the tribunal, in the Second Partial Final Award, expressly set out the following: "6. Further,....
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....es and which version fits the facts as found." This case was answered in great detail, finding that it was the Appellants and not the Respondent No.1 who materially breached the JVA. Given this position, the tribunal finally held: "291. Given the findings made by the Tribunal in favour of the Claimant's allegations of material breach it naturally follows that the Respondents do not succeed in these allegations of mismanagement 292. The Respondents were themselves in materialbreach with regard to the whole conduct surrounding Mr Dhall's appointment of Ms Mathure and the so called authorisation form. The Claimant was not in material breach in suspending Mr Dhall. Far from it. The Respondents, however, were plainly in material breach by their reaction to this suspension effectively leading to a one day strike. 293. The question of the attendance of Claimantnominees at the Akruti office is another chapter of the saga in which the Respondents do not emerge without serious criticism. As is clear from this Award the Respondents engendered a toxic atmosphere at Akruti in January 2012 (even in its fire stricken state) and such was the situation at the ground that it was not ....
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....he First Partial Final Award records: "IX. Tribunal's ruling on jurisdiction 134. Finally, there were before the Tribunal three shortpoints on the scope of the jurisdiction of the Tribunal under the arbitration agreement in the JVA. 135. Sensibly, the parties only made very briefsubmissions on these points. At one point, it seemed that the Respondents' accepted that the Tribunal did not have the jurisdiction which it contended for, but instead was inviting the Claimant to agree upon an expansion of the Tribunal's jurisdiction in order to avoid any possibility of multiplicity of proceedings under different agreements. 136. In the end, however, the Respondents' counseldid invite the Tribunal to rule upon these short points. The three points were as follows: 1) Whether under Clause 27.1 of the JVA the Tribunalhas jurisdiction to decide who has the right to register the Ravin trademark. 2) Whether the Tribunal has jurisdiction to decidealleged breaches of the Trademark License Agreement. 3) Whether the Tribunal has jurisdiction to decidealleged breaches of the Technical Assistance Agreement. 137. The Tribunal concludes that it does not havejurisdictio....
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....advanced by the Respondents in their pleaded case." 91.We have gone through the transcript of the hearings on both 12th and 13th December, 2012 before the arbitrator which clearly show that no argument was ever made by the Appellants before the tribunal that the Respondent had surreptitiously attempted to register the Ravin Trademark in its own name, and therefore was in breach of the competition clauses of the JVA. We are thus satisfied that this argument again appears to be an afterthought which has no foundation in the submissions made before the learned arbitrator. This submission does not again fall within any of the grounds referred to under Section 48. IV. The Tribunal acted contrary to the Parties' expert witnesses and ignored critical evidence with regard to the acquisition of ACPL 92.Dr. Singhvi argued that the tribunal acted contrary to the admissions of the parties' expert witnesses and ignored critical evidence with regard to the acquisition of ACPL. Further, since the Respondent failed to produce the relevant documents regarding the competing business carried out by ACPL, an adverse inference ought to be drawn against the Respondent No.1, which the Appellants alle....
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....n to ACPL or vice versa. The arbitrator then held that ACPL is a small specialist cable business and operates principally in the area of instrumentation cables, which is not the area in which Ravin operates. The learned arbitrator also adverted to the evidence of the expert witnesses in arriving at this conclusion. It also made a reference to Mr. Karia's cross-examination, stating that Mr. Karia himself considered ACPL to be the 50th or 60th competitor given its small business. The finding, therefore, was that the acquisition of ACPL did not in any manner amount to a serious material breach of the JVA. 95.Insofar as the failure to produce documents by Respondent No.1 with regard to its subsidiary ACPL is concerned, it must be remembered that ACPL is not a direct subsidiary of Respondent No. 1, being an indirect subsidiary of Respondent No.1's parent company consequent upon the acquisition of Draka. It has an independent Board of Directors. Above all, ACPL was not a party to these arbitral proceedings. The tribunal therefore made Procedural Order No. 5 dated 27.11.2012 in which it specifically recorded that if the Appellants wish to pursue their request for disclosure of further do....
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....es, however, were for all practical purposes made up of sales of telecom cables, industrial special cables, automotive cables, network and component and services. Ravin did not manufacture those types of cables. Indeed over 85% of the sales came from two affiliates manufacturing telecom cables, which Ravin did not manufacture and had no experience in selling either. Indeed the Tribunal accepts the evidence of Ms Farise and Mr Koch and Mr Karve on this issue (see, inter alia, §§5-8, E(I)/10/56-57, §23, E(I)/26/206, §23, E(I)/26/207, §§18- 32. E(I)/23/184186, 11 December 2012 hearing, pp.134-140, §46, E(I)/17/92, Day 2, pp.83-86, §18 of, E(l)/24/189). This renders the whole argument of diversion of sales or breach of good faith by virtue of these direct sales somewhat academic. 278. Indeed these figures illustrate exactly why the Respondents placed so much emphasis on their argument that the mere fact of sales was a breach irrespective of anything else. This was once more how it was put by Mr Salve SC in his oral closing argument (Day 10, pp. 183-185) The Tribunal has, however, found against the Respondents on this point." 98. Having peruse....
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....visions of the JVA." VIII. The Tribunal's selective consideration of contemporaneous evidence 100. Dr. Singhvi then argued that the tribunal's analysis of contemporaneous conduct is selective and perverse. Without going into any further details in this ground, this argument must be rejected out of hand, as not falling within the parameters of Section 48. Equally, the tribunal's consideration of evidence of key witnesses being selective and perverse, must be rejected on the same ground. IX. The Tribunal appointed a conflicted valuer 101. Dr. Singhvi then contended that the tribunal appointed a conflicted valuer, which prevented the Appellants from participating in the valuation exercise. This has been dealt with in the Final Award dated 11.04.2017 by the learned arbitrator as follows: "II. Deloitte Valuation Report and the Respondents' Challenge to Deloitte 4. It is important at this stage to record one specificmatter here which is referred to and set out in the Claimant's submissions (see paragraph 24 and Annexure E thereto at pages 170-172) and not contradicted by the Respondents in its submissions. On 14 October 2014 (Annexure E p. 171), Mr Karia on behalf of th....
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....r to Deloitte having acted as auditor of Power Plus Cable Company LLC ("Power Plus") a company incorporated in the UAE and based in Dubai in which Ravin holds a 49% shareholding, This is not the same entity as the Company, and did not impugn Deloitte's independence and did not prohibit them under the terms of Clause 17.3 of the JVA from being appointed. Clause 17.3 only applied to a prohibition on the statutory auditor of the Parties to the JVA acting as Valuer. It is not suggested that Deloitte was the statutory auditor of Ravin. Power Plus was not a Party to the JVA. Further, Clause 17.1 of the JVA expressly identified Deloitte as a suitable independent party to be appointed as Valuer. In any event, Deloitte's role as auditor of Power Plus was known to the Respondents and having agreed not to object to Deloitte in their 30 April 2013 email it was no longer open to the Respondents to advance this point. There was no breach of the JVA but even if there had been it was waived by the Respondents. 6. Thus following this exchange, Deloitte were in duecourse engaged albeit through the default mechanisms provided for in Procedural Order No 12." We are satisfied that the learned....
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....s lack of cooperation with Deloitte was effectively controlled and directed by the Respondent. This was most notably the case with regard to the Company's failure to issue the Engagement Letter to Deloitte following Procedural Order No 12. The Tribunal therefore concludes that it is not open to the Respondents to complain of the lack of further data being proved to Deloitte. It was the Respondents who were in control of the provision or non-provision of that data. 2) The Tribunal also concludes that the Respondentsare not entitled to complain of the delay in the production of the Deloitte Valuation Report since that delay was materially contributed to by reason of the Respondents' complaint with regard to Deloitte's involvement which is made to the LCIA. It is notable that the Respondents have not in their submission denied that they made such a complaint to the LCIA and have not contradicted the Claimant's submission that this complaint materially contributed to the delay in the production of the Deloitte Report. 3) Furthermore, the Respondents are not entitled tocomplain that Deloitte has used a valuation date of 30 September 2014. This was the valuation date ....
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....ator awarded INR 63.90 per share as per the Deloitte valuation, which was contractually binding under clause 17 of the JVA. Therefore, the lower valuation of INR 16.88 per share as in the M/s Kalyaniwalla & Mistry valuation report dated 04.03.2016 was not accepted. XIV. Bias of the Tribunal 106. Lastly, Dr. Singhvi argued that the learned arbitrator was clearly biased in that the outcome of the Second Partial Final Award was clear to the Respondent No.1, inasmuch as its agent, one M/s Gilbert Tweed Associates, sent out an advertisement for recruiting employees for Ravin, two months before the Second Partial Final Award, thereby showing that this agent was clear as to the outcome of the proceedings. This was strongly refuted by the Respondent, stating that at no time had Gilbert Tweed Associates been retained by them. As a matter of fact, an agency called M/s Key2People was engaged by Respondent No.1 to identify potential candidates who could be recruited for the company in due course. M/s Key2People, in turn, appointed M/s Gilbert Tweed Associates. In any case, the Respondent undertook to terminate the engagement of M/s Key2People by its email of 28.10.2013. The allegation of bi....